USOil Analysis – 6 May 2020

USOIL, Daily

Yesterday, the American Petroleum Institute (API) showed that inventory levels of US crude oil, gasoline and distillates stocks in private stores, stepped lower to 8.40 million barrels compared with the previous 10.00 million barrels last week. USOil tested its four-week high, going above $26.00 during the Asian session, and currently trades at $25.35 at the time of writing in the European session.

Even US President Donald Trump had his say, as he tweeted “Oil prices moving up nicely as demand begins again!” on Tuesday morning. Today all eyes will be on the EIA report; however, after many reports from different sources that US production is cutting lower, expectations for today’s report are not high and the market expects lower numbers at 7.759M. The question now is whether the reduction will be less than expected or not.
Last Friday, the US Baker Hughes Oil Rig Count fell to 325 from the previous 378 confirming that production must be much lower, and lower production means lower inventories.

In the end, since there is still significant oversupply in the market, and as long as more real demand does not appear, positive sentiment alone, which came in the first days of the biggest ever supply cut which started at the beginning of May, has not that power to lead the market much higher.

Technical Overview – Daily Chart

The sixth consecutive bullish day pushed the price higher than 23.6% of its Fibonacci (from the January high of $63), while 38.2% Fibo sits at $29. In the daily chart, first confirmation for bullish trend at the moment is $29, which is the April 3 high as well. If USOil can hold the level, the next key level will be $36, which is 50% of Fibonacci levels. On the flip side, breaching below $20.31, which is 23.6% of Fibonacci as well, would make the next bull move much harder to confirm.

  • Pivot point: 24.00
  • Resistance levels: 27.00 / 28.35
  • Support levels: 22.70 / 19.70

Today, the expected trading range is between 22.70 support and 27.00 resistance.

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Ahura Chalki

Market Analyst

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